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Donald Trump’s luxury hotel launch lacks luster for some buyers

Donald Trump smiles as he officially opens Toronto's Trump International Hotel while some investors work with lawyers behind the scenes to get out of expensive deals.

Donald Trump, and his children Donald Jr., Ivanka and Eric, officially launched the Trump International Hotel and Tower Toronto Monday. Behind the glamour, some investors are fighting to get out of the condo deals. (VINCE TALOTTA / TORONTO STAR)

The Donald flew into Toronto Monday to officially open the new Trump International Hotel, taking the spotlight — at least briefly — off negotiations going on behind the scenes with investors trying to get out of condo deals.

Well over a dozen investors, some of whom bought more than one of the unique hotel/condo units when they first went on the market back in 2006, are refusing to pay final closing costs and assume ownership of units they say no longer make financial sense.

“I think some people will walk, some people will (eventually) close and some of them will inevitably end up in litigation,” says Toronto lawyer Bob Aaron who is representing “a handful” of buyers, including a U.K. couple who’ve refused to make final payments on a $830,588 unit.

A group of 10 Korean investors is also reportedly looking to get out of deals on multimillion-dollar units, concerned about maintenance fees that have now hit close to $3,000 a month, on top of other add-on costs like cleaning and “booking fees.”

But any investor revolt — if he even knows about any— didn’t seem to be ruffling a hair on Trump’s carefully coiffed head Monday. He waved and yelled hello to the crowd poised with cellphone cameras outside the elegant 60-storey hotel on Adelaide St. where Mayor Rob Ford, his brother Doug and dozens of media gathered for the official ribbon cutting in a 10th-floor conference room.

The Star was denied entry to the press event which was “invitation only,” according to one Trump executive, noting that The Star wasn’t on the list and that it was “a full room.”

Alex Shnaider, the Russian steel magnate and chairman of Talon International Development Inc. which built the five-star project, would only say later that he was “very happy” with the event to which Trump brought his daughter Ivanka, as well as sons Eric and Donald.

While the hotel has actually been open for weeks now, work on the condo floors continues and seemed to tie up elevators yesterday, creating long lineups to get to and from the ribbon cutting.

But behind the scenes the real work is continuing, with lawyers like Aaron.

“A lot of people went in blinded by the Trump name and Toronto’s condo boom. They put up a lot of money,” says Aaron.

“These (purchase) documents were very tightly written and they are one-sided,” to remove most of the financial risk of the project from Talon, he alleged.

“There’s not much I can do,” for investors.

One purchaser estimates his monthly costs, including mortgage fees and property taxes on a less than 600 square foot hotel/condo unit for which he paid $860,000, would now run about $8,000 a month.

He’s part of a group of Korean investors who refused to pay final closing costs due two months ago and hope to get back deposits worth almost $200,000.

“If I had closed then, I would have lost almost $10,000 already,” because of monthly fees, including $2,400 in commercial property taxes, says the investor who spoke on condition his name not be used. “I’m not going to let that down payment go without a fight.”

One U.S. buyer has already won the right from Ontario’s court of appeal to renege on his $709,000 hotel/condo suite and get back his $212,700, citing two-year delays in the project.

While that could have been grounds for other investors, most of those who’ve contacted Aaron agreed in writing to Talon’s requests for extensions because of construction delays — eight months because of weather alone.

Lawyers have been in discussions for about six weeks now, but investors may be in for a long and, ultimately, fruitless fight, Aaron warned.

Unless Talon agrees to let some off the hook or reduce the cost of some units, most owners are likely in breach of contracts and could be responsible for any damages accumulated by their delays in finalizing deals, he said.

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